A ruling issued by the United States Supreme Court on January 14 admitted a class action lawsuit filed in 2020 by a group of investors against the Binance exchange.
With this decision the Supreme Court accepts a challenge that the plaintiffs filed in March 2024, rejecting a decision made by the US Court of Appeals for the Second Circuit. This court prevented them from proceeding against Binance, when they accused the exchange of failing to alert them about the risks of buying cryptocurrencies.
As reported by CriptoNoticias, investors claim that – before making their purchases – the platform did not issue the warnings required by the country’s regulations. According to the lawsuit, Binance violated section 12(a)(1) of the Securities Act of 1933. Therefore, customers of the cryptocurrency exchange seek to void their contracts and claim damages due to the lack of the company.
Binance claimed that the lawsuit was invalid, as the United States had no jurisdiction over the matterconsidering that the investors participated in a “foreign platform.”
Recent innovations in technology have empowered investors to participate in foreign financial markets with greater ease and efficiency. This interconnectivity and ease of access has increased not only the size of the market for transactions, but also the number of Americans trading on foreign exchanges..
Binance, cryptocurrency exchange
This is an argument that the Supreme Court rejectedthrough the decision taken today. The highest court dismisses the appeal filed by Binance, according to which national laws limit the scope of the cryptocurrency exchange because it is not based in the United States.
The Court considers that the fact that Binance will use national servers to host your platform involves the company. Consequently, it ensures that investors can file complaints arising from purchases of crypto assets on the exchange.
US-based investors who purchased ICX, OMG, QSP, TRX, FUN, EOS and ELF in 2017 are therefore expected to join the class action. This, under the argument that, at that time, national laws were already applicable to determine the liability of the exchange.
This new twist on a class action lawsuit filed against Binance comes amid multiple legal problems for the world’s leading cryptocurrency trading platform, not only in the US but in several countries.
The situation faces the company –again– to the courts of the United States. In mid-2023, the Securities and Exchange Commission (SEC) sued the exchange for violating federal securities laws, accusing it of trading securities (security) not registered.
This legal action is still ongoing and awaiting the court’s ruling. The axis of the dispute is in the classification of some cryptoassets as security. An allegation that the SEC managed by Gary Gensler has used to sue several exchanges, and that will likely be resolved during Donald Trump’s new mandate.
Binance also paid the largest fine ever imposed in that country on a bitcoin exchange. Its founder and former CEO, Changpeng Zhao, was sanctioned and sentenced to four months in prison. All this after admitting violations of the country’s sanctions and money transmission laws.
